Investing in America’s clean energy Economy: The Future of Electric Vehicles
Heather Boushey, Chief Economist, Investing in America Cabinet
The President’s modern American industrial strategy aims to address market failures that hinder the U.S. economy from meeting its economic and national security needs. A key aspect of this strategy is the development of a clean energy economy, with a particular focus on the transportation sector. Currently, transportation accounts for the largest share of U.S. greenhouse gas emissions, mainly from light-duty vehicles. To achieve the President’s goal of net zero emissions by 2050, widespread adoption of electric vehicles (EVs) is crucial.
The Growing Market for Electric Vehicles
The U.S. consumer market for EVs is rapidly expanding. In the third quarter of 2023, EV and hybrid sales made up 18 percent of U.S. light-duty vehicle sales. In just one year, Americans purchased one million fully electric vehicles, setting a new record. President Biden is actively supporting this growing demand through his Investing in America agenda. By working with Congress on the Inflation Reduction Act, he has successfully lowered the price of new and used EVs and incentivized American EV and battery manufacturing. This has attracted over $152 billion of investment into the sector since taking office.
Market research shows that overall consumer satisfaction with electric vehicles is extremely high. In fact, 80 percent of EV owners are likely to buy another EV due to factors such as easy charging at home, driving enjoyment, vehicle quality and reliability, and low ownership costs. However, survey data reveals that the lack of public charging availability remains a significant barrier to EV adoption. Concerns about driving range, charger availability, and charging time also contribute to hesitancy in considering EVs for future vehicle purchases.
Investing in EV Charging Infrastructure
Economic research indicates that investing in an extensive EV charging network is a cost-effective solution to overcome the market failures hindering EV adoption. Recognizing this, President Biden has allocated $7.5 billion from the Bipartisan Infrastructure Law to build a national network of EV chargers. This significant public investment serves as a case study for how smart public investments can attract private sector investment, promote fair competition, and create domestic job opportunities.
The challenge of building an effective EV charging network stems from the “which comes first” problem. Consumers hesitate to buy EVs without sufficient charging infrastructure, while firms are reluctant to invest in charging infrastructure without enough EVs to support their investment. Public investment in EV chargers addresses this market failure by increasing EV adoption rates. Research on Norway’s EV incentives has shown that policies enhancing access to charging stations are highly effective in boosting EV sales.
President Biden’s Investing in America agenda aims to build a national network of at least 500,000 public chargers by 2030. The Bipartisan Infrastructure Law allocates $7.5 billion for EV charging, with $5 billion dedicated to establishing a “backbone” of high-speed chargers along major roads and highways. An additional $2.5 billion will be provided through competitive grants to fill charging gaps in local communities. To make charger installation more affordable, the Inflation Reduction Act includes tax credits for individuals and businesses.
Implementation of these initiatives is already underway. All 50 states, along with Puerto Rico and the District of Columbia, have developed detailed plans for EV charging infrastructure. Several states have already begun installing chargers funded by the NEVI program, and more activity is expected in the coming weeks.
Fostering Fair Competition and Creating Jobs
President Biden has prioritized fair competition in the future EV charging market. Currently, the use of multiple charger types and plugs creates compatibility issues, limiting EV owners’ access to the full charging network. To address this problem, the Biden-Harris Administration has established minimum standards for EV chargers funded through federal programs. These standards ensure that chargers support widely-used charging systems while allowing flexibility for Tesla’s North American Charging Standard, which is gaining popularity. Transparent pricing and charger availability are also required under these standards.
To ensure reliable chargers and create job opportunities, the Administration has implemented the Electric Vehicle Infrastructure Training Program. Certified electricians are responsible for installing and maintaining chargers, and the International Brotherhood of Electrical Workers has trained approximately 20,000 individuals through the Infrastructure Talent Pipeline Challenge.
Crowding in Private Investment for EV Charging
The Bipartisan Infrastructure Law serves as a down payment on establishing a nationwide EV charging network. By combining public investment with tax credits provided by the Inflation Reduction Act, the United States is on track to meet the estimated investment needs for charging infrastructure. As of December 2023, the country already has over 165,000 public charging ports, with a significant increase in fast charging ports since the start of the Biden Administration. Major automakers have also announced plans to build an additional 30,000 chargers, further expanding the charging network.
As the United States progresses towards its clean energy future, investing in EV charging infrastructure plays a critical role. President Biden’s comprehensive approach, encompassing public investment, fair competition, and private sector participation, ensures that the nation is on the right path towards achieving its climate goals while creating job opportunities for American workers. With the continued support of the government and market demand, electric vehicles will play a significant role in shaping the future of transportation.
Read More of this Story at www.whitehouse.gov – 2023-12-11 15:30:00
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